Small Businesses Special Tax Break

http://smallbusiness.smh.com.au
Mark Davis

OWNERS of small businesses will gain a special tax break if they buy new equipment ranging from computers and fax machines to cars and industrial machinery before the end of the financial year.

As part of its latest economic stimulus package, the Federal Government is offering small businesses a tax deduction of 30 per cent of the cost of new capital equipment worth more than $1000 so long as it is bought by June 30 and installed before the year's end.

The Government gave the examples of a business buying a $2000 computer, which would attract a $600 deduction against its tax liability, and a firm buying a $60,000 backhoe, which would gain an $18,000 deduction.

The tax deduction will be available for any business with a turnover of $2 million a year or less. It will fall to 10 per cent for equipment bought from July until the end of December for installation by the end of 2010.

Bigger businesses will be eligible for the same tax deductions but will have to spend at least $10,000 on new equipment to qualify.

The Treasurer, Wayne Swan, said the tax break would help businesses increase their investment spending, which would bolster economic activity and support jobs.

"Businesses in Australia, especially small businesses, are the engine of the Australian economy and deserve direct support during a global recession," Mr Swan said.

The Government expects the tax break, which will come on top of existing deductions to business for depreciation of capital equipment, will cost it $2.7 million in foregone revenue over the next three financial years.